10
bubble blowers -- appreciation should continue to grow
Boise, Idaho. Besides having
a happy-sounding name, Boise is consistently mentioned
as a small, but strong real estate market. Forbes magazine
ranked it first on its 2005 list of the best places
for business and a career; John Burns Real Estate Consulting
puts it almost at the bottom of its list of markets
headed for a potential housing
bubble.

John Schleimer, a real estate market consultant
to major builders, says that both Boise and parts of
the Idaho Falls panhandle will "hold up very well"
housing appreciationwise.

"They're getting a migration of people
fleeing the blue states," he says. Annual housing
price increases have been a modest, but steady 4 percent
to 6 percent over the past couple of years, with a significant
-- but not out-of-proportion -- increase of 14 percent
in the last quarter of 2005.

El Paso, Texas.
Real estate market watchers have noted for some time
now that Texas is a value buy. Local Market Monitor
recently released a listing of overvalued and undervalued
markets. Four of its 10 undervalued markets were in
the Lone Star State, with El Paso the most undervalued
market in the nation (the other undervalued Texas markets
were McAllen, Dallas-Fort Worth and Houston).

"If I was an investor in real estate
-- and I'm not -- I'd carefully consider Texas markets,"
Winzer says. "They had a big boom and bust about
10 years ago. They're at the end of that. They haven't
been great markets for awhile, but quite likely, as
economies improve there, people will move there, especially
since prices are relatively modest."

Fortune ranked El Paso third on its list
of markets set for strong appreciation in the next two
years; another Texas market, San Antonio, was first.

Albuquerque, N.M.
This is another city at the bottom of John Burns Real
Estate's Housing Cycle Barometer, a measurement of cities
that are susceptible to a housing bubble. It's also
high on Fortune's list of markets that should experience
growth in the next two years and had a healthy increase
(18 percent, according to the NAR) in 2005. Locals say
the area attracts Californians trying to escape high
housing prices; once they discover the mild year-round
weather, they don't want to leave.

Seattle, Wash./Portland,
Ore. The overall news out of the Pacific Northwest
isn't great. The area lost jobs in the tech bust and
is still recouping. But in terms of housing price appreciation,
the thing these cities have going for them is a restriction
in supply. Tight controls on development have prevented
the normal progress of builders going farther out from
the city core to find cheap land in the suburbs. Hence,
demand stays high for available units. (Forbes Magazine
lists Seattle as the most overpriced place to live in
the country; Portland was third on the list.)

"Portland and Seattle have really
benefited from California's growth," says Richard
Gollis, principal of San Francisco-based real estate
consultants The Concord Group. "Portland is starting
to see the next generation of housing product, which
is large-scale, high-density projects in downtown. The
same thing is happening in Seattle. People who moved
there 20 years ago for the tech market are older now
and have a different lifestyle."

Salt Lake City
Nothing drives housing like a stable economy and job
growth. Salt Lake City has both. Job growth is up about
4 percent, unemployment is low, the housing costs-to-income
ratio is moderate and Utah builders give buyers a lot
of house for the money. Local Market Monitor reported
an 11 percent increase in appreciation in the market
between 2004 and third quarter 2005, and Money magazine
ranked it 20th on its list of 100 markets for growth
over the next two years.